The Stats You Need To Know About The January Transfer Window

Inside the multimillion pound world of football transfers

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Premier League clubs have spent a whopping £1 billion in the January window since 2003.

But why and how have they done this – and do they get value for money?

Football finance experts Deloitte attempt to explain.

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1| January is a seller's market

The 1 billion spent since 2003 accounts for only 20 per cent of the total expenditure during that time, so why the disparity?

Well, for starters, the January sales last for only 31 days and clubs are loathe to lose their best players at a pivotal moment in the season; European aspirants find it difficult to sign players of a suitable calibre because their targets are often cup-tied.

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Oh, and rivals hate selling to one another, meaning desperate teams can also be held to ransom, all of which makes January a tough market to buy in.


2 | The £225 million card game

The January window is a high-pressure poker game with managers, chairmen and sporting directors closely guarding their cards.

When one club raises the stakes with a big, or inflated deal, others follow as money floods into the market, meaning the level of activity in a January transfer window can hinge on a single signature.

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A prime example of this took place in the 2010/11 window when Fernando Torres signed with Chelsea for £50 million. Liverpool then reinvested the money in Andy Carroll and Luis Suarez and the approximated £100 million splurge contributed to a record January gross spend of £225 million.

DATA: GROSS PREMIER LEAGUE SPEND

 

3| TRANSFER FEES, FINANCIAL FAIR PLAY AND THE £3 BILLION KICKER

If the public is confused as to why Premiership clubs have been able to spend record fees in a time of global economic crisis, it's because the growth in revenue (TV, sponsorship deals, foreign investment) has established the top tier of football as a recession proof commodity – for now.

In 2006/07, the combined revenue of clubs in the Premier League was £1.5 billion.

The projected figure for 2013/14 is around £3 billion. The Financial Fair Play ruling is designed to ensure that football clubs break even. With revenue levels rising in Premiership football, we're going to see even more cash going into transfer fees and player wages.

DATA: ANNUAL PREMIER LEAGUE DATA

 

4| Shopping abroad is a bigger risk in January

Figures show that clubs prefer to buy domestically in both the January and summer transfer windows – that's deals involving British players or players already operating in England, preferably the Premier League.

The reason for this is clear: clubs require value for money in most deals.

A player already familiar with the language, culture and style of football will adapt to a new club more rapidly than a player moving from abroad, especially in January when the acclimatisation period won't include a pre-season campaign.

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5 | Do British players always cost more?

A regularly quoted "fact" is that British players cost more than their foreign peers, though the figures paint a contradictory story.

Last summer, players arriving from abroad cost an average of £8 million. Compare that to the averages spent on English players (£4.5 million) and players from Premier League clubs (£6 million) and it proves that there is value to be found in the domestic market.

 

6 | Where's the cash going?

Spain, mainly, where £340 million has been spent in the last eight transfer windows (up until the summer of 2013), though La Liga is followed closely by France, Italy, Holland, Germany and Portugal.

There are a number of issues in play when considering the ranking of these countries. Firstly the quality of players involved is a major contributing factor, as is the financial strength of those leagues – not everyone is desperate to sell, especially not in Germany.

That means players from those countries carry a higher cost than those from markets such as Eastern Europe or South America where bargains can still be found.

Meanwhile, English clubs can offer foreign players a compelling financial reason to come to the Premier League: wages.


7 | Deadline day trolley dashes: the truth

To the outside world, the final 24 hours of a January transfer window resembles a mad house.

The revelation of last minute deals (usually at White Hart Lane), players appearing at football clubs without an agreed contract in place (West Brom's Peter Odemwingie), and Harry Redknapp's traditional interview through the window of his car have become an amusing distraction from the results business.

It's also assumed evidence of a trolley dash mentality within the game.

However, the reality is that clubs often know what players they want, but their availability rests on other deals, or one major deal (see No.2) going through elsewhere in the market.

 

8 | Managing the balance sheet

Are clubs able to do this?

In general, yes. The Premier League's wage-to-revenue ratio over the past few years has been a steady 70 per cent, meaning 70p in every pound goes on total wages.

The good news is that clubs are earning more than they spend. So, for example, in 2011/12 total wages went up by £64 million.

However, revenue went up by £87 million, which offset the extra spending. (Historically, big media deals and broadcasting contracts have often translated into bigger player wages and larger transfer fees.)

The worrying caveat is that the figure of 70 per cent stands as an average. So while the majority of clubs are balancing the books, there may be a minority that overspends.


9 | The risk of buying big

The main concern about buying big is felt by those clubs threatened by relegation.

Clubs have often spent heavily on players in January in order to stay in the top flight and maintain their high revenue streams, but the negative financial implications involve wages rather than any transfer fees; the clubs that frequently get into financial trouble are those that haven't mitigated relegation into their players' contracts.

Managing a Premier League budget on a Championship revenue stream is a tough call, even with the parachute scheme (a figure reported to be in excess of £60 million, structured into four annual payments) and clubs that invest heavily in the Premier League can find themselves struggling financially when they drop a division.

 

10 | Will the bubble burst?

In the short term, it's unlikely that huge transfer fees and player costs will diminish any time soon, mainly because of the sport's international appeal.

The Premier League is a globally attractive product, with commercial poke in regions such as Asia and the Middle East (where the recession wasn't as debilitating as in America and Europe).

As long as broadcasters continue to offer big money for TV rights (there has been a 70 per cent uplift in the domestic live rights to the Premier League over the previous three-year deal) and stadiums remain full (2012/13 saw a 95 per cent attendance rate) then clubs have a chance to maintain their financial equilibrium.


This article first appeared in Esquire Weekly, our new iPad-only edition. Containing 100 per cent new and original content, it’s published every Thursday on the Apple Newsstand.

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